KARACHI, Sept 18: The KSE 100-share index on Thursday recovered 182 points followed by active short-covering in the leading base shares, signalling that bull-run will continue in the sessions to come on the strength of some basic positive fundamentals, notably expectations of higher dividends and a possible deal on LFO.

After the last two sessions’ massive battering, stocks roared back to their pre-reaction levels on strong covering purchases in the leading base shares as well as second-liners at the lower levels. Energy and auto shares and some blue chips on the other counters, which rose sharply higher from the previous lows led the market advance.

The KSE 100-share index, which has shed 300 points during the last two sessions, eroding Rs64 billion from the market capitalization, rose to finish net higher by 182.06 points or 4.25 per cent at 4,475.06, which incidentally was the day’s highest level. Total market capitalization also rose by Rs37.130bn to Rs992.231bn from the previous Rs955.101bn.

“There were more than one positive news for the bulls to fight back”, analysts said, adding “as there was no change in the basic bullish fundamentals the bear-led shake up proved short-lived”.

A sharp decline in the badla rates from 18.7 to 12.8 per cent, 38 basis points increase in yield on T-bills in Wednesday’s auction from 1.27 to 1.68 per cent and reports that 2.5 per cent (107.5m) shares of the Oil and Gas Development Corporation of Pakistan (OGDC) will be disinvested through the bourses were some of the stimulating factors luring investors back in the market.

“We don’t think money will outflow from stocks to the T-bills despite increase in yields for the second consecutive auction”, they said, adding “the return on investment in shares is still on the higher side and investors will find it pretty difficult to miss the attractive bait”.

But what seems to have reinforced investor confidence in the share business after the last two days’ massive shakeout was reports of an imminent deal on LFO between the MMA and the government, they added.

“Positive signals originating from the MMA sources indicate that the government has tamed them into a more co-operative ruling elite, which may well ensure smooth sailing on the political front”, brokers said.

All the leading shares including PTCL, PSO, National Bank and many others virtually raced toward their pre-reaction levels on active short-covering at the lower levels.

Hub-Power, whose share has declined by 10 per cent during the last two sessions seems to have pulled itself out of the negative fallout of conversion of 58m shares into paper shares by the UK-based National Power International, which has a big stake in it and finished partially recovered.

Leading gainers were led by National Refinery, Shell Pakistan, PSO, Treet Corporation and Javed Omer, which posted gains ranging from Rs11.60 to Rs51.65. Others were led by Island Textiles, IGI Insurance, Pakistan Refinery, Al-Ghazi Tractors, Pak-Suzuki Co, Millat Tractors, Glaxo-SKF and Cherat Papersack, up by Rs6 to Rs8.

Losses on the other hand were fractional barring BOC Pakistan, Artistic Denim, Attock Refinery and Lakson Tobacco, which was quoted ex-dividend ex-bonus, off Rs2.50 to Rs7.12.

Trading volume showed a modest increase at 480m shares from the previous 462m shares as gainers forced a strong lead over the losers at 251 to 98, with 41 shares holding on to the last levels.

PTCL topped the list of most actives, up by 50 paisa at Rs39.10 on 78m shares, followed by Hub-Power, higher by 85 paisa at Rs40.25 on 68m shares, National Bank, up by Rs2.35 at Rs51.85 on 47m shares, Fauji Cement, firm by 55 paisa at Rs12.55 on 30m shares and PSO, sharply higher by Rs14.15 at Rs303.15 also on 30m shares. The heavy buying was attributed to rumours that its sell-off date is being announced during the next couple of days.

Other actives were led by Pakistan Oilfields, higher by Rs25.40 on 25m shares, FFC-Jordan Fertilizer, higher by Rs1.50 on 18m shares, Sui Northern Gas, up by Rs2.15 on 17m shares, Bosicor Pakistan, firm by Rs2.90 on 16m shares and D.G. Khan Cement, up by Rs2.95 on 15m shares.

FORWARD COUNTER: All the speculative shares raced toward their pre-reaction levels under the lead of PSO, which spurted by Rs20.75 at Rs297.95 on 11m shares. Fauji Fertilizer, MCB, ICI Pakistan and Engro Chemical also posted gains ranging from Rs3.10 to Rs4.50.